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Swiss luxury watches: Rolex’s low supply pushes other brands as well, but what if demand drops?

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Carlos Esteves for Unsplash

There is a problem that, perhaps, will affect only a limited range of people, but which is indicative of the current times. The boom in demand for Rolex watches and a lack of sufficient supply are driving interest in all other luxury brands, said the director of the Watches of Switzerland Group Plc retailer.
Sales of Swiss luxury brands Rolex, Patek Philippe and Audemars Piguet recorded only “modest” increases in the retailer’s fiscal year 2022, largely due to the scarcity of the most sought-after watchesChief Executive Officer Hugh Brian Duffy said in an interview. Qhis sparked interest in other high-end brands.

Carlos Esteves for Unsplash

“We more than doubled our increases with them,” said Duffy, citing Richemont’s Cartier, Swatch Group’s Omega, LVMH’s Tag Heuer, Rolex’s sister brand Tudor, and independent Breitling.
The retailer, with 171 outlets in the UK and US, said demand for some Cartier and Tudor models is causing new supply problems.

“We can’t get enough Santos,” Duffy said of Cartier’s aviator watch. “We can’t get enough of Tudor,” particularly the brand’s chronograph models.

Incredibly, this situation risks being a boomerang for companies that cannot cope with excess demand. Watches of Switzerland Group Plc lost 5% on the London Stock Exchange. Moreover, if a company does not have the product that is the object of its business to sell, it has difficulty in making profits.
Sales increased sharply during the pandemic, when the abundance of money pushed the search for a safe asset, much loved by specific collectors.
Watches of Switzerland’s full-year revenue increased 40% to $ 1.54 billion (£ 1.24 billion) in constant currency, the company said Wednesday. For 2023, it has forecast a turnover of between 1.79 and 1.45 billion dollars (1.5 billion pounds).

Prices for Rolex and other Swiss luxury brands are starting to stabilize or decline slightly in the second-hand market after a feverish surge. Obviously, a luxury item, to be very successful, needs a clientele that is rich and willing to spend. The ideal are the “New rich”, for example those who have made money with virtual currencies, a category that is now falling. Therefore, the risk is that, after a peak in demand, even the prices of the most prestigious products will stabilize, if they do not decrease, also due to the entry on the market of new competitors who have taken advantage of the excessively limited supply. Sometimes being too exclusive can be dangerous.


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